Bosnia's top international representative, Lord Ashdown, has issued a stern warning to the country's politicians over the alleged sale of arms to Iraq in breach of United Nations sanctions.

Along with the commander of the peace-keeping force, S-For, he has called for an investigation into military sales by a state-owned factory in the Serb-controlled east of the country.

The raided aviation company is state-run

This is one of the fiercest rebukes Bosnia's Serbian leadership has had since the signing of the Dayton peace agreement.

At a press conference on Sunday the country's top international officials accused the Republika Srpska government of both covering up and ignoring the role of state-owned companies in an arms trade with Iraq.

The criticism follows a raid on an aviation plant by Nato-led troops earlier this month, which revealed, military officials say, that the company was repairing engines for Iraqi Mig fighter jets.

Cruise missile

The head of the Organisation for Security and Cooperation in Europe in Sarajevo, Robert Beecroft, also said there was compelling evidence that Bosnian and Yugoslav firms may have been working on the development of a cruise missile with Iraq.

Both Bosnian Serb and Yugoslav leaders have promised to investigate the allegations.

At the same time they sought to play down the role of state firms in the affair, claiming that the deals were done by corrupt officials seeking personal profit.